Investors can't stop talking about a one-month-old app called Anchor

Anchor cofounders. Nir Zicherman (L) is
cofounder and CTO. Michael Mignano (R) is cofounder and CEO.
Anchor
This past weekend, Austin, Texas was crawling with startup founders, reporters, marketers, and investors. The goal: to power network and to find The Next Big Thing.

South by Southwest is an annual conference that kicks off with four days of panels dedicated to interactive companies. It's been the launchpad for some now-large tech companies, including Microsoft-owned GroupMe, Twitter, and Foursquare.

Each year, one startup seems to steal the show and be all anyone can talk about. Last year, livestreaming apps Periscope and Meerkat had a lot of buzz. This year, the coveted spot went to an app that's just one month old, Anchor.

Anchor is a lot like Instagram or Twitter in that it allows users to publish content to anyone who follows their feeds. But it doesn't allow photos or text to be posted.

Instead, Anchor is all about your smart phone's microphone. The app lets users record up to two minutes of audio, then publish it. Users can reply to posts with their own audio messages. It's like SoundCloud, but nothing can be pre-recorded, and no recording can be longer than two minutes.

One of Anchor's cofounders, Michael Mignano, attended South by Southwest and sat down with Business Insider for an interview. Here's how he founded Anchor and how the new buzzy app works.

A new type of radio where you can talk back

Mignano and his cofounder Nir Zicherman met while working for Aviary, a New York-based photo-editing platform that was acquired by Adobe. There, Mignano worked for a man who'd one day be Anchor's pre-seed investor, Scott Belsky. Belsky is an early investor in Pinterest and Uber; the former Adobe executive is now a partner at venture capital firm, Benchmark.

"Nir and I really liked podcasts and talk radio and audio in general," Mignano said of Anchor's genesis. "We were talking about how — despite the fact that more and more people were consuming podcasts and podcasts were having this revolution — creating and distributing voice content was still very, very difficult."
To create an Anchor recording, just hold your phone to your ear and start talking for up to 2 minutes.Anchor

Mignano had tried to start a podcast and found it hard to get the right quality and reach for his recordings. But smartphones theoretically could make audio recordings much easier because everyone had internet-connected microphones in their pockets.

Plus, Mignano wanted a way to create actual conversations, not podcasts with listeners who were powerless.

"Unlike traditional radio, Anchor is multi-directional," Mignano explained. "It's not a one-way broadcast. When you listen to the radio, there's no way to interact with it ... On Anchor, you can reply to everything you hear to start a real discussion."

Mignano and Zicherman got a few friends to start testing their idea. Last year, they signed up nearly 100 friends and family members to try Anchor in private beta. On February 9th, the app officially launched in the App Store. The startup has four people working for it and it has raised just under $2 million.

Creepy comments amplified or smart discussions?

At least four early stage investors we spoke with — two who are Anchor investors and two who are not — mentioned the up-and-coming app at South by Southwest unprompted. The non-Anchor investors weren't sure if the startup was a good idea or not.

One voiced concerns over whether or not an app with limited text could prove to be valuable. The only text allowed in Anchor is captions that describe the recordings. That makes it difficult to surface Anchor's content in keyword searches.
You can reply to any Anchor recordingAnchor

Additionally, the idea of chatting back and forth with anonymous strangers on the Internet doesn't sound all that fun or safe. If Anchor's community starts getting filled with trolls like many anonymous comment boards online are, it's not going to be very fun to listen to hate speech directed at you, read aloud in your ear.

For others who did invest, Anchor is tackling an obvious missing category in a sea of social platforms. There's a feed for photos (Instagram/Snapchat), there's a feed for text (Twitter), and there's a feed for videos (Periscope/Vine). So why not one for voice? And while no one we spoke with would offer up specific metrics, they all said engagement was through the roof.

How to launch a consumer app successfully in 2016

It's not easy to launch a consumer app now that many of the most popular ones, including Twitter, Snapchat, and Instagram, have hundreds of millions of users. Mignano says Anchor's strategy has just been to focus on building a community.

"You can make the greatest app in the world with the most killer features. But at the end of the day it's about the people using it," he said. "From day 1 we've said we want to be super open and accessible with the community. We talk to people on Anchor pretty much all day every day. If I'm not coding or designing, you can pretty much find me on my phone talking to people on Anchor."
The App Store promoting Anchor
Twitter/App Store

Additionally, the app has some share features and a website that helps spread "waves," the sound bites users create on the app, to other social media channels. Anchor also encourages its community to welcome new members after they make their first recording by following the hashtag "#firstwave."

Within a few minutes of making my first recording (a quick 2-minute interview with Mignano), I had a reply from a stranger.

"That's really weird," he admitted. "Not a great first wave experience for you."

But my creepy message aside, Mignano insists there are many other great experiences on Anchor, from people recording mini-standup comedies, to women singing lullabies. Others pretend to be characters. There's one man who pretends to be Jigsaw from the horror movie "Saw," but instead of making death threats he offers life advice. Another Anchor user pretends to be Yoda from Star Wars.

"You work on something for so long and you believe in it and you want people to enjoy it, but you never really know until you launch," Mignano said. "People are not only using Anchor the way we hoped they would, they're loving it."